Supplies of most of the world’s major food commodities are expected to be adequate in 2024/25, although extreme weather, rising geopolitical tensions, sudden policy changes and other factors could all potentially tip the delicate global demand-supply balances and impact prices and global food security, according to a new report from the Food and Agriculture Organization of the United Nations (FAO).
The FAO predicts record-high outputs for rice and oilseeds, while modest declines are expected for wheat and maize productions. This balance is crucial as it impacts global supply chains and market stability across major food staples including wheat, coarse grains, rice, oil crops, sugar, meat, dairy products, and fisheries.
GLOBAL FOOD IMPORT BILL
For 2024, the global food import bill is forecasted to rise by 2.5 percent, surpassing $2 trillion. This increase is driven by favourable macroeconomic conditions such as steady global economic growth and relatively lower food commodity prices.
SPECIAL FOCUS: IMPACT OF SHIPPING COSTS ON FOOD IMPORTS
A special chapter in the report explores the dynamic effects of shipping cost shocks on the food import bill. Recent volatility in shipping routes due to geopolitical tensions and climate-related disruptions (like drought impacts on the Panama Canal) have significantly influenced import costs, particularly affecting net food-importing developing countries (NFIDCs).
FOCUS ON FERTILIZERS: MARKET DYNAMICS AND TRADE
The report also delves into the global fertilizer market, highlighting its recent challenges and outlook. Factors such as the war in Ukraine and soaring natural gas prices have disrupted fertilizer production and trade, leading to fluctuating prices. However, recent months have shown a stabilizing trend with improved availability and affordability of nitrogen, phosphorus, and potassium fertilizers.
KEY STATISTICS AND TRENDS
- Fertilizer Prices: As of April 2024, fertilizer prices averaged $327 per tonne, a significant drop from $815 per tonne in April 2022.
- Trade Volumes: Despite earlier disruptions, fertilizer trade volumes have rebounded, approaching levels seen in 2021.
- Future Outlook and Risks
- Looking ahead, the FAO emphasizes the potential risks to global food markets, including:
- Extreme Weather: Such events can disrupt agricultural production and supply chains.
- Geopolitical Tensions: These can lead to sudden policy changes and trade disruptions.
- Shipping and Energy Costs: Fluctuations in these costs continue to impact food import bills and market stability.
While the FAO’s Food Outlook 2024/25 paints a relatively stable picture for global food supplies, it underscores the vulnerability of these forecasts to various external factors. Awareness of these risks and proactive measures are crucial to safeguarding global food security amidst an increasingly volatile global landscape.